End of Session Summary: Economic Development

A Summary of the Legislature’s Work on Commerce and Economic Development

First Time Homebuyers

Last year, we passed an Economic Development Bill that created a first-time homebuyer down payment assistance program that provides up to $5,000 to Vermonters in the form of a 0% interest rate loan, repaid to the Vermont Housing Finance Agency when the main mortgage is refinanced or the home is sold. In the first six months of the program, 72 loans were financed. The average age of the new homeowners is 31 years with an average income of the buyers being $63,600. This year, the legislature extended the first time homebuyers tax credit until 2022.

Matching Employees with Employment

Adequately aligning our workforce skills with employment needs is key to prosperity in our state. Vermont, like New Hampshire and Maine, is facing workforce shortages as the number of retirees surpasses the number of new, younger workers hitting the market.

The news is good for Vermont workers – more jobs are available. Vermont’s employers, however, still struggle to find employees with the specific skills to meet their work demands. The legislature has funded an array of programs to help bridge this gap. For example, this year we invested up to 10% of the Vermont Training Program Fund’s work-based learning programs for students. We also updated to our Workforce Development Board statutes to better align with federal workforce support programs. From technical and career center programs, to workforce training, to non-degree education grants – Vermont is well on its way to creating a stronger, more agile, and prosperous workforce.

Vermont Economic Development Authority (VEDA)

This session, we increased the lending authority for VEDA by $25 million to expand the number and size of loans they can lend. Their single loan size was also increased from $2 to $5 million.

The legislature also increased the amount of money that VEDA can transfer from the Vermont Jobs Fund to the Vermont Agricultural Credit Corporation (VACC) by $40 million. VACC makes farm loans available to strengthen existing farm operations, encourage diversification, support beginning farmers, and encourage marketing and processing of Vermont agricultural products. Forestry products and businesses were added to the credit program at the same time the cap was increased. Taken together, the legislature approved an additional $65 million dollars to support economic development in the upcoming fiscal year.

Vermont Employment Growth Incentive (VEGI)

Since VEGI was established in 2007, it has generated over 7,000 new jobs with average annual wages of approximately $50,000. It is considered to be one of the best tax incentive programs in the country. In an effort to make the program more effective and appealing to potential applicants, the criteria for applications were streamlined and clarified, statutory guidelines were replaced, the process for deciding program caps was redesigned, and an unused property tax stabilization incentive was eliminated.

Acknowledging that the VEGI program has worked well for some types of large employers, the legislature directed the Joint Fiscal Office to work with experts to evaluate the underlying assumptions of the program. Additionally, the overall goals and outcomes of the program will be evaluated, including if we are serving businesses located in our “job growth centers” – regardless of size.

Bolstering our Creative Economy

Vermont’s thriving arts sector enhances our economic vitality and contributes significantly to our public and private assets. This year, the legislature appropriated $30,000 to the Vermont Arts Council to establish the Vermont Creative Network, in collaboration with other partners. The network will function as a communications, advocacy, and capacity building entity to bolster Vermont’s creative sector and enhance our quality of life. Vermont’s highly successful Farm-to-Plate Program will be the model for the network. Since its establishment, the program has increased sales of Vermont’s farm products by 32% and increased employment in that sector by 11%.

A University of Massachusetts Dartmouth analysis showed in 2014 over $304 million in direct spending in Vermont by individuals and businesses in the creative sector (narrowly defined as artists, arts organizations, and arts venues). The creative sector leveraged an additional $247 million in economic output for businesses throughout Vermont. The same study found that 4,300 Vermonters are employed in the creative sector and another 3,000 are employed in jobs related to the sector. The total amount of compensation (including benefits) generated by Vermont’s creative sector was over $158 million with an additional $14.7 million paid in state and local taxes.